Topic: Will DAI remain to be stable? (Read 51 times)
It works interestingly, you need to google it. But what's the point in the new dollar equivalent?
Isn't that the value of tokens you put in smart contract to get DAI is much highier (not lower) than amount of DAI you get so that if tokens price used as collateral is going down DAI is simply dumping them? So the only way DAI will go below 1 $ is a massive altcoin dump big and fast anough that DAI want be fast enough to dump them which is quite unlikely considering the fact how much money is locked in liquidity pools on biggest DEXes.
When you want to take a loan, there must be a guarantee that covers the amount you want to borrow and add a little more in case the loan value changes.
stablecoins need to have an equal amount of dollars for each dollar they print, but how can this happen using smart contracts and without having to trust the other party?
HOW DAI remain to be stable? 1 DAI = 1 USD (more or less)
When DAI dips below the peg price, the system makes it attractive for users to close their CDPs by repaying their debts – specifically, because interest rates are raised. This reduces the total DAI supply, as the amount repaid is destroyed. Should the price exceed a dollar, the opposite occurs: users are incentivized to open CDPs as interest rates are lowered. This creates new DAI and increases the total supply.
source: https://academy.binance.com/en/articles/a-guide-to-makerdao-and-dai
In short, this is DAI's mechanism of action, but the question is will he continue to preserve its STABLE value?
What are the chances of freezing your money?
stablecoins need to have an equal amount of dollars for each dollar they print, but how can this happen using smart contracts and without having to trust the other party?
HOW DAI remain to be stable? 1 DAI = 1 USD (more or less)
When DAI dips below the peg price, the system makes it attractive for users to close their CDPs by repaying their debts – specifically, because interest rates are raised. This reduces the total DAI supply, as the amount repaid is destroyed. Should the price exceed a dollar, the opposite occurs: users are incentivized to open CDPs as interest rates are lowered. This creates new DAI and increases the total supply.
source: https://academy.binance.com/en/articles/a-guide-to-makerdao-and-dai
In short, this is DAI's mechanism of action, but the question is will he continue to preserve its STABLE value?
What are the chances of freezing your money?
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